Case study of Sanyo Industries’ Internet Procurement System

by Andy Tan
October 4, 2000
Revised April 23, 2002

The initiative

Sanyo Industries (SIS) e-business strategies begin by defining her immediate and long-term objectives. She does not want to discard her existing internal business process software and seeks for solution that can help the company to communicate, collaborate and connect to their business partners (suppliers) seamlessly and cost effectively across the supply chain. 

The key short-term objectives are:

• Lower processing cost for issuing a purchase order.
• Fast turn-around time for purchase order confirmation by suppliers.
• Ease of use and low cost of implementation for suppliers to use the system.

The long-term objectives are:

• In-corporate the rest of their business processes
• Collaboration with partners, e.g. production and sales forecast
• Partners communication and information exchange

Based on Sanyo's initial requirement, we implement a Web-based procurement system. We first focus on the purchase order function of the procurement process. 

The key functions will include:

• Issue purchase orders
• Suppliers' confirmation
• Production schedule

In the later stage we will incorporate the rest of the operation.

Existing System

Purchase orders are generated by SIS business software and these orders are printed which are later faxed to the suppliers. The suppliers acknowledge the purchase orders and return to SIS by fax. SIS buyers update the status of the orders to the system manually. SIS processes about 1,500 purchase orders per months to about 100 suppliers both locally and overseas. 

The disadvantages of conventional system are many - higher cost (IDD charges for overseas suppliers), longer turn around time, intensive use of human resource and error prone in entering data. 

SIS as a manufacturing organization needs to operate efficiently to remain competitive in the new economy. The business dynamic of today's competitive marketplace where demand changes quickly requires organization to be flexible and able to react to these changes. Managing the supply chain become ever more important than before. Turn around time or processing purchase orders become a challenge.

We provide a solution that is predefined and optimized for rapid deployment, with an open front end for customization. For flexibility, scalability and ease of implementation the entire solution is built based on Microsoft Windows platform. 

The Solution

• Microsoft NT Server 
• Information Server (IIS)
• SQL Server version 7.0

The front end is a standard web servers implemented using IIS. CGI and ASP pages are used to create dynamic web pages to display the purchase order and allow the suppliers to acknowledge their orders. These orders can be downloaded as Excel compatible files and XML format. Suppliers can use this data for importing to their own legacy system. 

The middle tier consists of an application server, which provides the following functions:

• Extract the data from the AS400/DB2
• Convert the data and store it into the SQL server
• Analyze the data and generate email messages to alert suppliers
• Manage queries

This application, developed using Microsoft Visual C/C++, provides an interface between the Internal business software and the web server. It decoupled the internal software from the Internet. This application effectively isolated the internal system from the Internet. 

In term of scalability, the SQL Server and the application can be executed on the same physical machine or separated into two different machines. 

The back end is an AS400/DB2 application, developed by Sanyo Industries, for managing their internal business process. We provide a scheduler, developed using Visual C/C++, to fire up the utility to extract and import the data to and from the AS400/DB2 application. The data is transferred to the application servers hosted at our data center using an Internet dial-up access. This scheduler can be executed either on demand or can be programmed based on time or interval. 

Benefits

Lower processing cost for issuing of purchase order

Our proposed implementation is far more flexible than that of a traditional EDI. Web based application integrates into your normal business procedures and tie directly to your database. It enables us to further incorporate Sanyo’s business procedures to achieve a fully automated process in supply chain management. This fully automated process can have a tremendous impact on business cost.

Fast turn-around time for purchase order confirmation by suppliers

Suppliers are informed about their purchase order through their e-mail and when they login to access the web page the confirmation is automatically updated to the AS400/DB2 application.

Easy and low cost for suppliers to use the system

The suppliers do not need special hardware or software to use the system. They only need to subscribe to a standard dial-up Internet access account from any of the local ISP. The software needed is a standard web browser and it is easy to use. The suppliers can access the system anywhere and anytime.

Flexible and enable further integration with existing business process software.

Using Internet technology, all business documents can be put in browser forms and tables, which significantly simplify the process of entering information and enable further automation on the process. It also enables better control over the accuracy of the information that is being placed into the system.

Lower cost of ownership

Using our e-Business Applications hosting service, companies do not need to invest in hardware infrastructure and maintenance.

Scalability for E-Growth

Our solution is built on the Microsoft NT platform, as the traffic to the site increases; we can deploy Microsoft Application Center Server to perform load balancing. 

Inter-operability between different systems in the Internet is important in the near future. XML will be the key enabling technology to enable information exchange with key business partner. By implementing our solution based on Microsoft NT platform allows us to adopt XML easily.

Our solution not only fulfils Sanyo Industries immediate needs, we also ensure that their future requirement is taken into consideration.